tv Worldwide Exchange CNBC November 6, 2019 5:00am-6:00am EST
>> it is 5:00 here at cnbc new doubts surrounding soft bank this morning big time take overtalk zerox reportedly muling over buying hp. what could be the largest leverage buy out in history. the dow, will it be another record day as we await signals of another trade deal. and surprise news of a build up
of u.s. inventory. it's wednesday, november 6 "worldwide exchange" begins right now. ♪ >> welcome from wherever in the world you may be watching. i'm brian sullivan futures are not giving us a lot of help there. flat to slightly down. they were up 10 a couple of minutes ago. we have a long way to go this morning. it has been quite a run for the dow lately nine stocks in the dow are up 10% or more in the past month and now 14 of the dow 30 are up 30% on the year. 3 m, walgreens and pfizer are the only ones down
the neeld in the 10 year is 1.84 pay attention to this. japan, the nikkei slowly grinding higher. now up 9% in 30 days 9% run, we talked about this about a month ago. japan has had quite a run. in europe, no run. we are not seeing a trade theme here new this morning, japanese technology firm reporting a massive loss it has been hit by the following of two of the best bets. wework and uber. rahel joined us. reporting the first quarterly loss now casting doubt on the ce o's
posting. a operating loss of $6.5 million compared to a profit of $6.5 million a year ago. suffering a nearly $$9 billion loss last year, they were forced to spend to bail out wework and adam neumann wework fell by 3.4 billion in the quarter. masa son did not mince words >> this announcement is not good at all it is a big negative in the three month quarter result is the size of the negative is probably the first time after the foundation of the business i want you to look at this picture. we are actually in the rough
sea. >> softbank's vision fund has vested $88 billion in companies. the value of listed investments including uber and slack fell. but soft bank will go ahead with the launch of a second vision fund saying his valuation of wework was not right but he still believes it is a solid business. he's standing by it. >> he has to >> even with these results >> we'll see you in a bit. >> let's get a check on some of the morning's top stories. xerox considering a buy of hp the company has an informal
funding commitment from a bank hp's market company is four times bigger than zerox and sales are far less than hp's nearly $60 billion and walgreens exploring a plan to go private. they have a market value of $54 million. one of the few dow stocks we noted lower this year. after talking about it more than a year, the fcc has approved t-mobile and sprint's merger the tie up still faces antitrust challenges another fed meeting a month away, no more rate cuts expected to be this year.
what will be the big theme driver going forward good morning, erin what is going to be the driver >> for me, it is just having a lack of negative news. >> no bad news is the good news. >> we have pretty good stable necessities. we don't need trade war headlines we don't need a positive outcome, just a lack of negative news. as long as we see retailers cut back in the holiday sales, i think this bull market will keep running through the end of the year. >> that will really be something extraordinary where we get a new tariff it looks slow and steady for the next few months and we should
continue to see this bull market >> november to april, the average gain is 7% to 8% going back to 1950 we've had a heck of a good run you heard the stats. what makes you remain optimistic >> one, there is still room for the parts of the market that haven't had good runs yet. we've seen value stocks from industrials, health cares, tradition follow economy they've been out performing the past few months. we've really seen that also seen potential for value stocks growing at a faster pace for next year. >> what is a value stock these days >> like your ibm, microsoft,
deere, caterpillar, anything in health care. they've popped all of your financials any financials is a value. these stocks, they have traditionally have lower growth for the last three years but the spread between growth and value is much smaller. we are talking 11% versus 8.5. there is not a big difference but the valuations for growth stocks are 50% higher versus value stocks this is the year where you can get a little more defensive. we are in an area of lowered interest rates this is the one area you can
still get solid growth >> inching towards phase one we get a deal is the market going to go up or has the market already priced that in >> we are trading at about a three-year average we could easily go up another 5% and still be within a value range. >> we have heard the story about walgreens and xerox. is it possiblethat market just stays afloat in part because the pool of assets continues to shrink >> partially
especially as we have a robust private investor field it is possible we keep these higher rates and growth. we are looking at 10% profit growth each year not bad at all this is a real possibility >> erin gibbs. always a pleasure. new questions surrounding softbank posting one of the biggest quarterly losses in history. a big day for uber, early investors may not be unloading their shares as the ipo lockup ends bringing us today today's big number 1.7 billion. that's how many rides and food deliveries did in the third r.arte up 31% from the same quarter last year. we are back after this
this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer.
say it could be different but why? many of the share holders are losing water uber shares are down 30% about 545 million shares purchased before the ipo are currently in the red uber shares down almost 2% again in the overnight market. one of the many startups that softbank sunk its teeth into let's talk more about softbank and its ceo masa son blind spots threaten son's $100 billion vision great to have you on
is wework and uber going to change masa son's vision >> it is the question everyone is asking. if you remember when the vision fund started it was all about 2016, 017 big roll out with saudi arabia, the concept of artificial intelligence and the future of everything and technology at the heart of this wild japanese investor you look at their investments. it is uber, wework it is not the artificial ai boom they are interesting developing companies that have been a big part of the economy but not these moon shot bets they are a late set of
investments. what has happened now is that soft bank, instead of the smart money riding in has now come in late to these companies and now when they go to exit to the public markets they are saying actually this company isn't worth what you paid for in the drive at market. he said to some degree, he is humbled by what is happening here i don't think it is a crisis but it feels like one from the outside. >> is it a crisis? >> it is a very challenging moment he's worked to raise hundreds throughout the year. it was voda phone, it becomes an investor of assets not an operator of assets.
to do that, you have to show a return if you have something add bad as wework and three weeks later, it is only worth $3 billion. with a concern of whether it will ever be a profitable concern, it is a proper crisis in the middle of a fundraising expecting the returns. you've leveraged the coupon on $40 billion of debt. softbank has $160 billion of interest baring debt things need to go right all the time huge set backs like this, huge corrections, a loss of faith in your ability, then yeah, it is probably a crisis. >> let's be clear, masa son is
an investor and he's a gambler you talk about leveling up $40 billion on $100 billion fund you've got a saudi investment fund he's making some big, potentially dangerous bets >> he's a risk driven gambler. he's the guy that would put $20 billion into ali baba. he is a risk addicted deal maker. that is the best way to describe what he's about. he's said he only wants to spend 3% of the time managing softbank and 90% of the time making investment decisions there is culture clashes, power
struggles. some of the guard rails have quick the company the president quit in 2017 he was very much against the wework investment. another left the company in april. another guard rail against some of son's instincts mark schwarts, apparently he became fed up with the culture and some of the stories and left it is not just a story of investments going badly and a leader who likes making deals. >> checking out your piece a very interesting company
have a feeling we'll be talking about softbank to come a one/two punch for president trump as he suffers a political loss in one key election and a top diplomat changes his testimony. tee why investors should tak no of what could be the biggest levered buy out in american history sundown vitamins are all non-gmo, made with naturally sourced colors and flavors and are gluten & dairy free. they're all clean all the time. even if sometimes we're not. sundown vitamins. all clean. all the time.
investment opportunities beyfirsthand, like biotech.ne because your investments deserve the full story. t. rowe price invest with confidence. whether your beauty routine is 3or 57,... make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy.
>> welcome back. a lot of results from yesterday's big election day in new york now with that and more >> a blue wave over the 2019 elections. democrats pulled off some major upsets the apparent winner in the kentucky race narrowly defeating the incumbent republican governor blevin has declined to succeed. and in virginia democrats take control of the state legislate your it wasn't all bad news for the gop. they did win handily in
mississippi. state reeves topped jim hood another top diplomat expected to testify today. the u.s. embassador to the eu is now remembering the story differently. he amended the story to acknowledge a kwquid pro quo wi ukraine. mick mulvaney came under fire before admitting to a quid pro quo before walking those statements back. >> coming up, why a german shoe company should give you some global optimism this morning they're all clean all the time. even if sometimes we're not. sundown vitamins. all clean. all the time.
man: how can i deliver superior long-term results? it begins with a distinctive approach to managing money. that for over 85 years has focused on keeping confidence up when markets are down. an approach where portfolio managers work well independently. and even better together. who don't just invest, but are personally invested. can i find a proven approach designed to deliver results? with capital group, i can. talk to your advisor or consultant for investment risks and information. talk to your advisor or consultant whether your beauty routine is 3or 57,... make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy.
>> welcome back, shoes, dating and weight loss all in focus today. adidas trading down despite better than expected revenue the company expects a pick up in sales as they expect to grow in europe next up match shares, that stock down nearly 15%. the owner of dating apps like match and tinder warn current quarters will come in below
expectations and wait watchers. shares of ww off also by 15% the number of subscribers did rise but growth slowed on the previous quarter coming up, soft bank taking a big hit on a number of startups like uber and wework if oil prices stay low, we will see a huge round of bankruptcies and job loss wel lkboeet and 'lta aut it next.
but in my mind i'm still 25. that's why i take osteo bi-flex, to keep me moving the way i was made to. it nourishes and strengthens my joints for the long term. osteo bi-flex - now in triple strength plus magnesium. dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere.
. uber and wework not working and softbank taking a hard fall this morning is one of the dow 30 going to be gone walgreens looking at going private. good news for twitter users. the company may be ready to change up one of its most annoying features. wednesday, november 6, you are watching "worldwide exchange" here on cnbc >> happy to be back with you here is how your money and global markets are setting up the day. futures are relatively flat.
they are down three points it has been quite a run for the dow recently nine stocks are up 10% or more 14 stocks are at more than 20% on the year. 3 m, pfizer and walgreens are down in bonds, the 10-year yield creaming up a little at 1.84%. in asia, stocks finish mixed i want you to focus on japan the nikkei 225 has done well the nikkei up 9% one of the best performing markets in the world let's look at what is happening in europe. let's get a check on some of this morning's headlines soft bank reporting a massive
loss a company posting an operating loss of $6.5 billion compared to the profit of roughly the same one year ago the $100 billion vision fund suffering the $9 billion loss. soft bank forced to spend $10 billion after it scrapped its cofounder adam neumann xerox discussing buying out hp what makes this interesting is that hp is about four times bigger than xerox. walgreens looking to go private.
we could have to find a new stock to put in the benchmark index. we are joined on the phone with sue at morning star. do you believe these headlines >> i think the speculation about walgreens is not as surprising it would require longer runways than the markets have room for it would reduce distraction of the scrutiny and reporting >> we noted it was one of three dow stocks down this year and i've got to imagine walgreen's ceo and their board has grown frustrated to all their response in the last couple of years. >> absolutely.
they take pride in how well they are performing he obviously thinks it is very undervalued at this point >> less than the market value. it is less but it is rare. >> this is quite unusual the proposed transaction is very large. i think this remains unchanged walgreens has convenient locations. they are fostering a lot of community partnerships where they can get health care in one
location and leverage that kind of hard to find that in the market >> looking at what could be a big story and a big buy out. just the fact that it is out there is interesting >> moving on to another interesting story. oil prices are down. but they have been down over the last couple of months. all of these companies saddled with debt. what about the political risk to the sector and those talking about ending fraking going to our guest listen, it is an industry facing a triple whammy. you've got a political risk saying we need to shut down
parts of the industry and we have this massive debt load that is like a bunch of rocks on a river. is there any way to get through one, two or three of those things the thing to describe is how much counter intuitive there is behind it. what deregulation means. it is kind of a sell the commodity buy the scenario winner you have too much supply relative to the demand you look at the future and when you look at the world of the regulation, that could be bad for the commodity. the problem is navigating between those two polls. living outside of your cash flow cape abilities is a lot harder
>> there are heavy types of oil. where the issue is you can buy oil from russia or texas and it is basically the same. it doesn't matter whether we cut back onraits now, i wonder if the damage has been done because the taps have opened up. >> it has opened up. huge fines in gee anna it is true things are likely to slow down. there is still going to be oil coming out of the ground that question is where does it go demand and trade the reason there is overhang
built into the market where big attacks can shut off and the price can still fall a week later, that is because of the demand fear. it is grounds for concern going into the first half of next year >> a few years ago, someone asked me why are you getting into the oil story it is a debt story how big is the debt threat >> we hear the same story. there is not enough financing around and overand over salvation comes through. it is not just a sweet spot that $50 to $55 a barrel isn't going to tie you offer what is the sweet spot that is a function of the ability to source financing on the debt side of their balance sheet. that looks more constrained than
it has in a long time. >> $137 billion in debt among american oil companies are they going to be able to pay that back? >> some will, some won't it all depends you are seeing rig counts fall is that the capital discipline or is that the after shock we'll see how tightly these companies can operate the average return of a stock operating in t operating there has been a loss in the path. kevin, a real pleasure
>> coming up, forget a smart watch. could you soon monitor your health through ear buds. impossible foods the plan to break into china what the company ceo is telling us about the meatless vision stick around sundown vitamins are all non-gmo, made with naturally sourced colors and flavors and are gluten & dairy free. they're all clean all the time. even if sometimes we're not.
sundown vitamins. all clean. all the time. ♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. and who doesn't love going home. i'm part of a community of problem solvers. we make ideas grow. from an everyday solution... to one that can take on a bigger challenge.
we are solving problems that improve lives. to take care of yourself. but nature's bounty has innovative ways to help you maintain balance and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy. >> a number of american companies are making their sales pitches as part of the international expo show. one of those is with plenty of buzz here in the states. impossible foods eunice, you had a chance to speak with the impossible ceo, what did he say about chances of a meatless future in china >> he seems very optimistic about it this morning, i spoke with ceo
pat brown in shanghai. he's here for their debut in the mainland market. he sees china becoming one of the company's most important markets. >> china is the biggest consumer of meat in the world the demand for meat in china is so great that china doesn't have the farm land to produce its own meat supply. it is a huge opportunity, a perfect opportunity for us to have a huge impact on climate change and biodiversity because china is such a big consumer >> on this trip, brown said he is looking for china-based pa partners the plan would be to manufacture here and he's confident the
company will be able to maintain strict quality control and he's not considered about china's slow approval about gmos his plant-based meat would be competitive. one unique aspect and that is that china already has a thriving plant based meat or fake meat culture because there are 250 buddhists here some say this culture has been around thousands of years. we have peking duck that is fake, orange, crab he says he wants the meat difference to be different because the company is serving
up 50,000 samples of burgers and dumplings and we kept overhearing the stall for impossible foods to the french beef stand i don't know if the french would be happy about that? >> fake peking duck. can we call it faking duck what is it made out of >> what is it? >> it is tofu, plants. it tastes the same it is similar. you can even get crab meat there is a lot of fake foods i was thinking this could be a great opportunity since they have a lot of different prototypes or it could be tough.
>> if it walks like a duck, talks like a duck, it doesn't have to be a duck. thank you. besides that gross story, it is time for this morning's top trending stories rahel is here with those >> twitter is exploring the idea of introducing some new features including options to remove themselves from conversations, disable the retweet function and send tweets to hashtags or groups in a retweet where if somebody tags you, you have to mute everybody. that would be a great feature.
you are like unsubscribe i have nothing to do with this >> cancel me do it. >> how do you feel about this one? >> google is looking to make it a bit easier >> i have a feeling you may not be on public transportation? >> each ridden every subway line i'm a public transportation geek i was on the two and three train yesterday two times. i even posted a picture. follow me on twitter but don't tag me in a retwreet >> google is trying to make it easier for all of those people they've been working on a wa
waze-like app called pigeon to relay delays and reports for now, the app is only available for ios users but will expand >> i will say the 2 and the 3 was green and arrived on time. >> i ride the 2 and 3 a lot of the time >> you are speeding along underground and you reelize there is traffic up there. >> it is the boogie subway >> amazon is working on a feature that would allow the echo buds to track work outs they can alsoer already track steps and business including options to track a
work out and create a fitness profile. should amazon launch this feature, it would be the first entrance to the fitness monitoring space >> what do you think >> i clearly love the fitness tracking watches >> do you track your data? >> everyday. >> does it worry you >> if i'm not working out, it worries me if i'm working out, it doesn't worry me >> words of wisdom thank you. i'll see you on the subway, rahel. >> what's happening to all the ceos out there the rate executives are leaving their companies. a major city decides you
>> all the headlines you need in about 60 seconds mining regulators in brazil say they've withheld information from investors about problems with a damn. 270 people were killed in that collapse a air bnb suffered a defeat in new jersey the decision will shrink the number of listings in new jersey's second largest city
and ceo turnovers in october was the highest ever 172 ceos who left last month up from 151 in september and 149 the same time last year. trade warhead lines continue to trade. earnings coming in a little better than expected joining us now is ed campbell senior portfolio manager at qma. are even you surprised at the strength of this stock market in the last couple of months? >> we've been in a trading range about six months or so >> but the last one or two months, we've been doing pretty well >> yeah, we are starting to break out.
a lot of those big numbers are driven by this starting point getting back to the numbers. dry to get past this 3,000 mark several times the chart we are showing is the key chart we hit this high and go back and fail the question is how long will it last is there value confirmation? the new high will become the support at the bottom. we didn't get the year end
rally. we had the opposite of that. the context is completely different. i see a number of things likely to drive the rally you mention the risks easing we are moving in the right direction of u.s./china trade? >> i think it is partially priced in but not fully. earnings are coming in better than expected. this is likely to be the bottom in terms of the earnings cycle >> what makes you confident in that >> a lot of the tough comparisons are rolling off. a lot will improve that is likely to make people feel better. we've got the monetary easing. we've had nearly 50 central banks ease they are likely to be on hold a
little bit but we'll see more cuts in 2020 >> you are painting a pretty picture, what's the biggest risk >> one of the things holding the market back is the market is focused on the risks with the easing of the risk here, we could see a nice rally. i'm not ig i norring the structural problems. >> a lot of really good people every negative data point comes out and they would post it we are slowing down a little bit. there is a difference between slowing down andstopping it could take multiyears to get to a point where it becomes a
worry about recession. maybe? >> i remember july or august when we were doomed. yield curve averted. what happened to that? a recession is coming and they can be healthy i get it. that's the normal cycle. >> all right, 30 seconds before we got to go coming up before the recession, markets typically do well before a recession. >> where are we vesting right now?
>> one of the things you've seen is you are starting to see a leadership change. even though we've had a strong stock market this year, there's been a defensive orientation you are starting to see markets embrace risk more. we would get more cyclical into year end >> great stuff have a great day we'll see you tomorrow on "worldwide exchange. "squawk box" with a record market begins right now. good morning, two potential deals on the table walgreens exploring a bid to go private and xerox looking at buying hp. >> masa son speaking out >> and lockup expiration day but don't expect to see much selling at the current price it is wednesday, november 6,
2019 "squawk box" begins right now. ♪ >> good morning, welcome to "squawk box. we are live in time square andrew is hosting the deal book conference with a huge line up including the ceos of ibm, boeing, microsoftand more. we'll bring you coverage later in the day our guest host today is suvita great to have you here today >> great to be here. >> the marke